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Full text of "ANNUAL REPORT - ONTARIO ENERGY BOARD 1963"

ANNUAL REPORT 
OF 
THE ONTARIO ENERGY BOARD 
YEAR ENDING DECEMBER 31, I963. 




ONTARIO 



TELEPHONE /~mm-i- a oi^-x c-mi-oov « ^ a r-, r-» 790 BAY STREET 

365-2851 ONTARIO ENERGY BOARD Toronto 2 



February 11+, I962+. 



Sir: 



I beg to submit the Annual Report for 
I963 of The Ontario Energy Board, and I have 
the honour to be, Sir, 

Your obedient servant } 



A. R. Crozier, 
Chairman, 



The Honourable J Re Simonett, 
Minister of Energy Resources, 
Parliament Buildings, 
Toronto, Ontario. 

ONTAIUO „ 

LIBRARY 



Digitized by the Internet Archive 
in 2013 



http://archive.org/details/annualreportonta1963onta 



ANNUAL REPORT 



OF 



THE ONTARIO ENERGY BOARD 



YEAR ENDING DECEMBER 31, I963 . 



ONTARIO ENERGY BOARD 
LIBRARY 



ANNUAL REPORT 
YEAR ENDING DECEMBER 31 , I963 . 

The report of the Board for the calendar 
year, 19&3 is submitted herewith in accordance with 
section 39 (1) of Part II of The Ontario Energy Board 
Act. 

Membership of the Board remains unchanged 
with a Chairman, one full-time Member and three part- 
time Members, Owing to the sudden death in July of 
J. J. Wingf elder, Member and Secretary, the Board has 
been operating with a Chairman and the part-time Members „ 

During the year the Board heard 70 applications, 
10 of which were held outside Toronto; held 35 Bioard 
meetings; and during the remainder of the year devoted 
its attention to the writing of reasons for decision 
and the study and investigation of gas storage matters. 

One of the main functions of the Energy Board 
is to fix and approve, by public hearing, the rates and 
charges for the sale of gas by transmission, distribution 
and gas storage companies in the Province, Other important 
functions are the granting of leave to construct trans- 
mission pipe lines, authority to expropriate pipe line 
rights-of-way, permission to store gas in designated areas 



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and granting approvals of bylaw franchise agreements and 

certificates of public convenience and necessity. In 

addition, the Board examines and reports on any matters 

relating to energy which may be referred to it by the 

Lieutenant-Governor in Council or the Minister of Energy 

Resources . 

The following is a breakdown of the hearings 

which have been heard during the year: 

The Municipal Franchises Act 

Approval of terms and conditions of bylaw 

franchise agreements (section 9) 14 

Certificates of Public Convenience and 

Necessity (section 8) 5 

The Ontario Energy Board Act 

Rates (section 17) 15 

Authorization to inject, remove and store gas 

in designated gas storage areas (section 19) 1 

Arbitration of compensation to landowners 

(section 19 (3)) . . . 1 

The Energy Act 

Leave to Construct pipe lines (section 11) lo 

Expropriations for pipe line rights-of-way 12 

Designation of gas storage areas (referred by 
Lieutenant-Governor in Council) 1 

Unitization or Joining of Interests - West 

Becher Pool (referred by Lieutenant-Governor in 

Council) 1 

Secondary Recovery of Oil (referred by Minister . . . . 1 

Deepening of existing wells in designated gas 

storage area (referred by Minister) 1 

Permission to drill wells in designated gas storage 

area (referred by Minister) 2 



-3- 



In addition to the above hearings, several 
days of sitting were required to complete the United 
Gas rate case which began late in I962 and the joint 
Northern Ontario Natural Gas - Twin City Gas rate 
hearing, which had been under adjournment from I962. 

Further, the arbitration hearing for the Dawn 
#156 Pool, which consisted of two applications heard 
simultaneously, required ten days of sitting and 
covered some 1200 pages of transcript . 

Throughout the year &7 applications were filed 
as compared with 96 in the previous year. Of these 70 
were heard, 13 were withdrawn and k will be heard in I961+. 

Each year the Board obtains from the trans- 
mission companies in the Province information pertaining 
to the footage and diameter of all transmission pipe 
lines owned and operated by them in any municipality. 
This data, which is used for assessment purposes is then 
forwarded to the respective assessors of approximately 
eight hundred municipalities. 
RECEIPTS 
Filing fees, hearing costs $10,i+ifl.25 

Sale of certified documents, printed 

Reasons for Decision, etc 6o8.80 

$11,050.05 



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Conference of Canadian Utility Commissioners 

On September 10th and 11th, representatives of 
nine Provinces met in Toronto to discuss utility regulatory 
matters of common interest. This conference was the 
first of its kind ever held in Ontario, and was presided 
over by Mr. A. R. Crozier, Chairman, of the Ontario 
Energy Board* 

Technical papers were presented by delegates 
from the public utilities boards of other Provinces on 
regulatory practices and procedures, determination of 
the fair rate of return, depreciation of utility property 
and uniform accounting regulation. Full discussion took 
place of these and other related problems. 

It was unanimously agreed by all Provinces that 
the exchange of ideas and viewpoints of this Conference 
will produce results which will justify the holding of 
future informal meetings. It is not proposed, at this 
time, however, to organize a Canadian counterpart of the 
National Association of Railroad and Utilities Commissioners, 
although some occasional contact with that American body 
may be helpful to the Provinces. 
Secondary Recovery of Oil 

Experience indicates that considerable quantities 
of oil which would not normally be recovered can be recovered 



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economically from depleted or partially depleted oil 
fields by the injection of water into the oil formations. 

Early in the year the Board heard an applica- 
tion by Imperial Oil Limited, which had been referred 
by the Minister, for a permit to carry out secondary oil 
recovery operations in the West Becher Pool which com- 
prises some 2700 acres and is located in the Townships of 
Chatham Gore and Sombra. 

At the same time Imperial Oil Limited made 
application to the Lieutenant-Governor in Council for a 
regulation requiring the joining of interests in the Pool 
(unitization) and this matter was referred to the Board. 

Following a public hearing of these applica- 
tions in Chatham and the Board's report and recommenda- 
tion to the Minister a permit, for secondary recovery 
operations was granted and also a regulation was passed 
by the Lieutenant-Governor in Council providing for the 
unitization of the Pool. 
Arbitration Hearing 

In certain matters, specifically those per- 
taining to compensation of landowers in gas storage 
areas (section 19 of The Ontario Energy Board Act) the 
Board acts as a Board of Arbitration. 

In this capacity the first hearing was that 



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of the determination of compensation of certain land- 
owners in the Dawn Storage Pool #156 in Lambton County 
and was to be heard in two phases: 

(a) the determination of the volume of gas 
in the Pool at the time of commencement 
of storage, the determination of acreage 
of certain landowners in the participating 
area and the method and manner of payment 

to such landowners for their royalties, based 
upon the percentage his acreage bears to 
the total acreage at the sum of 2 cents 
per Mcf» 

(b) the determination of the amount of storage 
rental per acre per annum to be paid to 
landowners . 

The first part of this arbitration outlined in (a) above, 
was heard in Sarnia commencing in February and after 10 
days' sitting was concluded late in September. The Board 
decision will be brought down in January, The applica- 
tion for the second phase, that of storage rental as in 
(b) above will be heard early in I96i+. 
United Gas Rate Hearing 

The hearing of the United Gas rate application 
reconvened in January, following a preliminary hearing 



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the previous year. This application was not for a 
rate increase or decrease bub rather for approval of 
existing rates and for the determination of a rate base. 

Following evidence-in-chief and cross-examination 
and argument the Board in its Decision, dated July k , 
1963; determined the rate base as at March 31, I962 and 
that the rates requested were just and reasonable and 
would not earn an unreasonable rate of return. This 
Decision, which runs to 2k pages, is in printed form 
and sets out in detail how the Board arrived at its 
Decision and its treatment of such items as allowable 
operating expenses, depreciation, amortization, working 
capital, donations, income taxes, etc. 
Northern Ontario -• Twin City Rate Hearing 

This joint rate application, the second of the 
major rate cases to be completed this year, covers some 
500 pages of transcript . Forty-two exhibits were filed 
and 9 sworn witnesses gave expert testimony. This was 
one of the most complex rate cases the Board has encountered 
because of the fact that recently built gas distribution 
systems, which have only been operating a few years, 
present an entirely new set of regulatory problems. It 
is anticipated that the Board's written Decision will be 
issued early in 196/+. 



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Designation of Gas Storage Areas 

An application by Union Gas Company for a 
regulation to designate an area as a gss storage area 
was referred to the Board by the Lieutenant-Governor 
in Council. 

The area in question covers approximately 
10,300 acres, is located in Zone Township and is known 
as the Zone Storage Pool. 

Following a public hearing in the City of 
Chatham, the Board in its report to the Lieutenant- 
Governor in Council recommended that a regulation be 
passed designating the area as a gas storage area. 

A regulation was duly passed thus adding a 
working storage potential of approximately i+.5 billion 
cubic feet (bcf ) and increasing to six the total number 
of storage areas developed and operated by the Applicant 
Company. 
"Leave to Construct" Hearings 

During the year there was considerable 
activity in pipe line construction. The Board granted 
leaves to construct for approximately 151 miles of 
transmission pipe lines, 13 miles of which was replace- 
ment of old lines while 13^ miles was new lines into 
areas not previously served. In this regard the major 
project was the construction of an 8" and 10" line from 



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Elmira to Durham to supply gas to the newly franchised 
areas north of Elmira. Branch supply lines were built 
off this main line to the neighbouring towns of Listowel. 
Palmerston, Drayton, Arthur, Durham and Walkerton and 
gas supply was available by the beginning of the winter 
heating season. Distribution systems were constructed 
in the municipalities at the same time as the construc- 
tion of the main and branch lines. In the coming year 
the main transmission line will be extended to Owen Soundo 

Leave to construct a 30" high pressure trans- 
mission line was granted across the northern part of 
Metropolitan Toronto from the Village of Derry West thence 
eastward to Scarborough Township in order to facilitate 
and improve gas services to the rapidly expanding residential 
and industrial market. 
Expropriation Hearings 

In connection with the building of new trans- 
mission lines the Board held expropriation hearings for 
12 parcels of land along the route of the Elmira-Owen 
Sound line, where negotiations for easement agreements 
between the Applicant and certain landowners failed to 
reach a satisfactory conclusion. It should be pointed 
out, however, that in pipe line expropriations the Board 
does not settle any matters pertaining to compensation. 



' . 



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Such matters may be referred to a Board of .ration 
which was appointed by the Minister under The Energy Act. 
Authorization Hearing s 

In September, a new company known as Tecumseh 
Gas Storage Limited was incorporated, It is owned and 
controlled jointly by Consumers' Gas Company and Imperial 
Oil Limited and its activities will be restricted to the 
operation of storage pools. In I96I Imperial Oil was 
successful in having 5 pools in Lambton County designated 
as gas storage areas following a public hearing and the 
passing of a regulation. Consumers' Gas Company, the 
largest gas distributor in the Province has a definite 
need for storage facilities. Hence the formation of the 
new company. 

Under The Ontario Energy Board Act, authorization 
must be obtained prior to the injection, storage and 
removal of gas in a designated storage area and accordingly 
Tecumseh Gas Storage Limited applied to the Board for such 
permission in three of the five designated pools, namely, 
Kimball-Colinville , Seckerton and Corunna . A public hearing 
was held at Sarnia and the necessary authorization Order 
issued in December. The authorization to store gas 
in these pools will add 1+0 bcf o^ storage capacity of 
which 30 has been set aside for Consumers' Gas and the 



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remaining 10 bcf v/ill be availa or use by oth 
distributors. Evidence was submitted indicating that 
storage would be required early in the summer of l96i+« 
Drilling in Designated Ar 

On reference by the Minister of Energy Resources, 
the Board heard several applications for permission to 
deepen existing oil wells and to drill additional wells 
in the Seckerton and Corunna Storage Pools. Following 
a public hearing, the Board recommended that the permits 
should issue. 
General 

In addition to the foregoing, the Board continued 
to hold public hearings to deal with applications of a 
more routine nature such as approving terms and conditions 
of bylaw franchise agreements for newly franchised areas, 
the granting of certificates of public convenience and 
necessity for the establishment of distribution systems 
and the approval of gas rates on an interim basis. 

Besides the above-mentioned routine hearings, 
the Board held meetings on matters of policy and procedi. .. 
prepared reasons for decision and interviewed representa- 
tives of the gas and oil industry. 



RR.01 1 
IU3 | 


AUTHOR 5 

Ontario Energy Board 
1963 Annual Report $ 






ONTARIO ENERGY BOARD 
LIBRARY